INDIAN OVERSEAS BANK 2023-24 Annual Report Analysis

Tue, 11 Jun

INDIAN OVERSEAS BANK has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

INDIAN OVERSEAS BANK Income Statement Analysis

• Interest income during the year rose 24.0% on a year-on-year (YoY) basis.
• Interest expenses were up by 27.6% YoY during the same period.
• Operating expenses increased by 35.8% YoY during the year.
• The bank's net interest income (NII) increased by 19.1% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 3.1% in FY24 as against 3.0% in FY23.
• Other income increased by 37.6% YoY during the year.
• Net profit for the year increased by 26.7% YoY.
• Net profit margins during the year increased to 11.1% in FY24 from 10.8% in FY23.

INDIAN OVERSEAS BANK Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	194,070	240,657	24.0%
Other Income	Rs m	41,164	56,653	37.6%
Interest Expense	Rs m	111,463	142,265	27.6%
Net Interest Income	Rs m	82,607	98,392	19.1%
Operating Expense	Rs m	64,298	87,305	35.8%
Pre-provision Operating Profit	Rs m	59,473	67,739	13.9%
Provisions & Contingencies	Rs m	38,433	41,083	6.9%
Profit before tax	Rs m	25,823	41,568	61.0%
Tax	Rs m	4,783	14,912	211.8%
Profit after tax	Rs m	21,040	26,657	26.7%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.0	3.1
Net profit margin	%	10.8	11.1

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INDIAN OVERSEAS BANK Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 2,861.2 bn as compared to Rs 2,609.7 bn in FY23, thereby witnessing an increase of 9.6%.
• Advances for the year stood at Rs 2,133.3 bn as compared to Rs 1,780.7 bn during FY23, a rise of 19.8%.
• Cost of deposits for INDIAN OVERSEAS BANK rose 9.2% and stood at 4.4%, while yield on advances rose to 8.2%.
• The lender's investments rose to Rs 991.9 bn during the year from Rs 936.4 bn in FY23.
• Borrowing stood at Rs 303.9 bn, a growth of 46.1% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 3,518.7 bn as against Rs 3,134.4 bn during FY23, thereby witnessing a rise of 12.3%.

INDIAN OVERSEAS BANK Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	248,760	275,614	10.8%
Advances	Rs m	1,780,677	2,133,301	19.8%
Deposits	Rs m	2,609,736	2,861,215	9.6%
Yield on advances	%	7.4	8.2
Cost of Deposits	%	4.0	4.4
Investments	Rs m	936,425	991,939	5.9%
Borrowings	Rs m	208,038	303,872	46.1%
Total Assets	Rs m	3,134,381	3,518,693	12.3%

Current Valuations for INDIAN OVERSEAS BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 1.4, an improvement from the EPS of Rs 1.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 66.9, stands at 37.6 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 4.6 times, while the price to income ratio stands at 4.2 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	10.3	12.7
Earnings per share (Unadj.)	Rs	1.1	1.4
Diluted earnings per share	Rs	1.1	1.4
Avg P/E ratio	Rs	23.3	37.6
Avg P/ABV ratio	Rs	1.9	4.6
Avg Market Cap	Rs	490,990	1,002,773
Dividends per share (Unadj.)	Rs	0.00	0.00

Ratio Analysis for INDIAN OVERSEAS BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 74.6x during FY24, from 68.2x during FY23. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio increased and stood at 11.48x during FY24, from 11.33x during FY23. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): INDIAN OVERSEAS BANK's capital adequacy ratio (CAR) was at 17.3% as on 31 March 2024 as compared to 16.1% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 9.7% during FY24, from 8.5% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.76% during FY24, from 0.67% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 11.13% during FY24, from 8.95% during FY23. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. INDIAN OVERSEAS BANK's gross NPA ratio stood at 3.1% as of 31 March 2024 compared to 7.4% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of INDIAN OVERSEAS BANK was 0.6% in financial year 2024. This compared with 1.8% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	68.2	74.6
Debt to Equity Ratio	x	11.3	11.5
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	16.1	17.3
Return on Equity	%	8.5	9.7
Return on Assets	%	0.7	0.8
Return on Capital Employed	%	8.9	11.1
% of Gross NPAs	%	7.4	3.1
% of Net NPAs	%	1.8	0.6
Yield on Advances	x	7.4	8.2
Yield on Investments	x	6.5	6.3

To see how INDIAN OVERSEAS BANK has performed over the last 5 years, please visit here.

INDIAN OVERSEAS BANK Share Price Performance

Over the last one year, INDIAN OVERSEAS BANK share price has moved up from Rs 24.8 to Rs 66.9, registering a gain of Rs 42.1 or around 169.9%.

Meanwhile, the S&P BSE BANKEX is trading at 56,868.6 (up 0.1%). Over the last one year it has moved up from 49,874.1 to 56,868.6, registering a gain of 6,994.5 points (up 14.0%).

Overall, the S&P BSE SENSEX is up 21.4% over the year.

(To know more, you can check out historical annual results for INDIAN OVERSEAS BANK here and quarterly results for INDIAN OVERSEAS BANK here)